Know Thy Customers’ Markets

Michael on Product Management and Marketing has posted the first in his series of product management commandments – Know Thy Customer. He provides five tips on how to know your customer better. We extend his idea to include understanding our customers’ markets, and provide more tips. By analogy, this is the difference between a detective who studies a criminal and a profiler who seeks to understand a class of criminals.

Why Must We Know Our Customers?

As Michael points out, the key trait of an effective product manager is one who knows her customers. As product managers, we have to understand our customers’ problems and convert them into requirements. From those requirements we define solutions, represented as products. Without a good understanding of our customer, we can’t identify the most important problems, and therefore can’t create the most valuable solutions.

One of many points that Pragmatic Marketing makes in their training is that product managers need to focus on multiple customers, not individual customers. They replace the “become a customer expert” goal with “become a market expert.” This helps drive their point home. We think we need to know our customer’s market, and not just our customer.

Understanding the market our customer requires us to know not only our customer, but our customer’s competition. Knowing our customer helps us understand the important and valuable problems. Knowing her competition’s problems helps us know which problems have value for multiple customers. One-customer problems require custom solutions. We want to maximize the time we spend on creating reusable valuable product features.

Michael definitely uses the plural when talking about understanding customers. We are taking this one step further, to include understanding of potential customers.

Things to Know About Our Customer’s Markets

The competitive landscape. Are there few or many companies in the space? Is it an oligopoly, monopoly, or free market?

How does our customer compete? What are the factors that our customer believes make them (or will make them) competitive? Do they compete on price or features? Do they rely on existing customers or new customers for their growth?

Is the market growing, shrinking or stagnating? Is our customer fighting for a larger slice of a shrinking pie?

What might disrupt this market? Our customer’s market is at risk of being obviated or obliterated at any time. Our customer may or may not accept this reality. At a minimum, we will understand our customers better by understanding their risks.

In addition to learning about potential customers, we also get a deeper understanding of our current customers by studying their markets.

More Sources of Customer Information

In addition to Michael’s five tips, we would suggest the following for each major player in the market:

Read the annual report. In addition to market data, we will find out what the CEO believes to be the most important objectives of our customer. This will help with prioritization of requirements.

Understand the users. Creating personas to characterize the users of our software at our customer helps us make better design decisions.

Diagram the political power in the organization. Politicians hold the trump cards for all software projects. By understanding who the real decision makers and influencers are, we can markedly improve our prospects for successful software sales. [Note: This applies to enterprise software more so than shrink-wrapped software.]

Conclusion

It is neccessary, but not sufficient to understand a customer. It is far better to understand the market of customers.

Product Management Today

@sehlhorst on Twitter

Who Should Read Tyner Blain?

These articles are written primarily for product managers. Everyone trying to create great products can find something of use to them here. Hopefully they are helping you with thinking, doing, and learning. Welcome aboard!